Think you don’t have the budget for PPC? Think again. Play your cards right, and you can achieve some pretty amazing results with a minimal budget. In fact, really focused and highly measured pay-per-click campaigns can be one of the most effective ways to spend a tight budget.
What Does a Customer Cost You?
The first consideration is how much your average customer is worth to you, either for an initial sale or the lifetime value of the typical customer. Then, you’ll need to determine how much you’re willing to pay to acquire each of those customers – leaving you with your desired profit margin.
For example, if your typical customer spends about $500 over a lifetime, in the first year or whatever time frame you’ve chosen to define, and you spend $100 to acquire that customer, you’re left with a $400 profit margin – minus other costs, like operating costs and materials. In order to simplify the calculation, you can start with your average profit per customer, if you have that data.
Once you’ve calculated those values and determined how much you’re willing to spend per customer acquisition, you can start planning your PPC campaign.
Conversion Rates are a Key Metric
Then your conversion rate comes into play. No business has 100% conversion rate – or if you do, you must have one heck of an epic sales and marketing team – so you have to account for both the leads you receive that don’t convert and those that do. Say, on average, you convert one lead out of every 10 you receive. If you’re spending $100 per customer, that leaves you with $10 to spend per lead.
Of course, if you’re analyzing your early results and find that your conversion rates are much lower than expected, you’ll need to either re-calculate your cost per lead or re-configure your campaigns to increase your conversion rate to where you need it to be.
That’s the beauty behind PPC – you can calculate all of this down to the dollar, and you have a pretty good idea of what you’ll need to spend to acquire a certain amount of business, and therefore what your ROI will be. The alternative? You could throw thousands of dollars into, say, a radio advertising campaign and have far less data to determine how effective your creative is or your true conversion rates.
Targeting Produces Exceptional ROI
Beyond great measurability, PPC offers much finer targeting capabilities than many advertising mediums. Think about the radio example. You can target an audience based on the primary demographic a particular station reaches, but you can’t force certain listeners to tune out and reduce the amount you’re spending by cutting out a sub-segment of the potential audience.
But with pay-per-click, you can use negative keywords to eliminate a subset of searchers who likely have a different intent and precise targeting methods to really drill down to the ideal customer. It’s not difficult to see how these capabilities result in smarter spending and a bigger return for every dollar spent.
Seasonal Approaches and Buying Cycles
Even if your budget is extremely limited, you can use this calculation and determine a spending amount for a short-term promotion. If you sell patriotic party supplies, for instance, you might run a PPC campaign in the weeks leading up to Memorial Day, the Fourth of July, and even Labor Day. Likewise, a company that makes personalized Christmas ornaments might run a campaign only in November and December, or whatever lead time makes sense for your customers’ typical sales cycle.
Additionally, you can use fine-tuned PPC targeting to reach customers at a specific point in the buying cycle. By bidding on keywords that indicate customers are ready to make a purchase, rather than in the early investigation phase of the buying cycle, you can often increase your conversion rates by reaching customers at the moment when they’re ready to make a purchase.
Targeting Options for Smart PPC Spending
Best practices for PPC generally apply across the board, but there are some useful tips that are especially beneficial if you’re working with a small budget.
• Don’t run too many campaigns. In fact, if you’re on an extremely tight budget, you might want just one campaign or a few highly-focused campaigns. In any case, running too many campaigns at once just means you’re spreading your budget too thin, and you might not see the results you want. It’s better to focus your efforts in a few key areas than to try to spread your budget out over dozens of potentially less-profitable campaigns.
• Watch for – and eliminate – sluggish performance. Monitoring your campaign analytics is even more crucial for small-budget campaigns. Careful monitoring allows you to quickly identify non-performing keywords and eliminate them from your campaign, shifting your spend to top performers to boost conversion rates and ROI. Likewise, if your landing pages are getting lackluster results, you can jump in with some alternative iterations and run some A/B testing to boost performance.
• Steer clear of broad keyword match. Broad keyword matching is useful for branding campaigns and for marketers with ample budgets. But when your budget is on the slim side, you can’t afford to waste ad dollars on loosely-relevant terms. Stick to exact-match and you’ll get better results.
• Use geo-targeting to your advantage. Even if your business is service-based, you might have better brand recognition in certain areas. Targeting geographically in your most profitable locations can yield better results in a shorter time frame.
• Identify and use negative keywords. There are variations on nearly every keyword that essentially disqualify a searcher from the target audience. Using exact-match helps to prevent this type of problem in the first place. But if you are using broad match, identifying negative keywords means you won’t pay for clicks that will rarely, if ever, convert.
Don’t let a small budget deter you from PPC. By making smart decisions and using the full capabilities of Google AdWords, you can create finely targeted campaigns that guarantee positive ROI.